Consider the following scenario:
The Dutch Girl paint factory uses process costing in their plant to calculate monthly profit and loss for the two production lines producing house paint. Manager bonuses are based upon performance against goals set by the division's top management. The cost accountant assigned to produce the monthly cost reports is surprised that each month the work in process inventory is estimated to be 80% complete for both lines. She finds it hard to believe that the percentage complete is so consistent from month to month. She asks the production managers to explain their percentage complete estimates.
Navigate to the threaded discussion below and respond to one of the following questions:
Q1: What are some possible reasons for the consistency in the percentage complete estimates produced by the two production lines?
Q2: What would be the implications for the performance reports for each of the possible reasons you have identified?
Q3: Do you believe that the percentage complete estimates are objective or subjective? Explain.